Oil Royalty and the Opposition: Nonsensical

Jun 26, 2025 Letters

Dear Editor,

Kaieteur News – This past Monday, Guyana’s newspapers highlighted a call from Opposition Leader Aubrey Norton urging that voters should determine increasing oil royalties from ExxonMobil to 25 percent. While higher royalties might sound appealing, such a move would be one of the most irresponsible political and economic actions any government could take. Mr. Norton’s statement reveals a lack of understanding of the fundamental need for investors to trust that legally binding agreements will be upheld, regardless of which political party is in office.

To understand the present situation, it is important to revisit what the People’s National Congress (PNC) negotiated in the original Production Sharing Agreement (PSA). In 2016, under then-President David Granger, the PNC signed a PSA with ExxonMobil and its partners, Hess Corporation and CNOOC, granting them rights to explore the Stabroek Block. The agreement allowed ExxonMobil to recover 85 percent of its costs and set a royalty rate of just 2 percent for Guyana. This PSA was signed on June 27, 2016, and was never subject to public consultation or meaningful debate.

The Granger administration had a responsibility to engage the Guyanese public and seek a fair deal, but it chose secrecy over transparency. The result: Guyana was locked into a low-royalty agreement that has drawn criticism both locally and internationally.

After the 2020 elections, the People’s Progressive Party/Civic (PPP/C) returned to office, with the then President Bharrat Jagdeo playing a key role in reshaping the country’s approach to oil governance. In stark contrast to the PNC’s closed-door approach, the PPP/C introduced a new model PSA for future oil blocks. Under this framework, royalties increased to 12.5 percent (a combination of a 10 percent base royalty and a 2.5 percent corporate income tax, treated as royalty). This was a significant improvement, reflecting a more assertive and competent approach to resource management.

A legitimately elected government has a duty to ensure political, economic, and legal stability, including the honouring of commercial agreements. Violating these agreements would trigger investor uncertainty, destabilise the economy, and send the wrong signal to the global market.
Mr. Norton’s proposal is reckless. It undermines the principle of legal continuity and disregards the gains Guyana has already made. Disrupting the country’s economic architecture for the sake of political grandstanding is not leadership; it is folly. The Guyanese people deserve thoughtful, forward-looking governance, not slogans masquerading as policy.

Sincerely,

Tilokie Depoo, Ph.D.

Economist

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Aubrey Norton, Economist, ExxonMobil, Oil Royalty, Stabroek Block, Tilokie Depoo

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